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The King Of Diplomacy On China-US Relations.
2009-08-19 20:56:00
I have always loved the television commercials where some cheesy guy wearing a crown (presumably the owner of the appliance store or whatever else it is that is being advertised) screams out the discounts you can expect to get by shopping at his store. If my memory serves me right, I've been witness to the King of Cars, the King of Discounts, and the Appliance King. John Grisham wrote a book called the King of Torts and who can forget Rupert Pupkin as the King of Comedy? Like him or not, Henry Kissinger is the King of Diplomacy and he has a Washington Post op-ed out today, entitled, "Rebalancing Relations With China " (h/t China Hearsay, who also thinks highly of the op-ed) setting out how the United States should be dealing with China. And again, like him or not, the guy does know whereof he speaks and this is his own summary of what should be done: While the center of gravity of international affairs shifts to Asia, and America finds a new role distinct from hegemony yet com...
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China's Rio Tinto Arrests. A Rapid Fire Historical Perspective.
2009-08-19 19:22:00
Sometimes big events can be so complicated, controversial and unwieldy, there is hardly any point in reading current reports because they are likely to be so biased and/or inaccurate as to be of no value. In those instances, particularly when the underlying topic is not of huge interest to me, I generally pretty much stop reading articles on it and just wait for the dust to settle. I think the common wisdom is that real dust settling (and releasing of key documents) and gaining of perspective usually takes around 50 years. And though I would love to be able to look at China 's recent Rio Tinto arrests from the perspective of fifty years hence, that is obviously not possible right now. So instead, I will turn to an excellent FT.com by Arthur Kroeber, somewhat mis-titled, "Rio Tinto arrests reveal China has growing-up to do." The thrust of the article is that China is a relatively safe place in which to do business, particularly as compared to Russia. I agree. China has done...
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Business Taxes In China. Feels Just Like Home.
2009-08-18 02:18:00
Ernst & Young is out with a very informative online publication on indirect taxes in China (h/t All Roads). The publication is entitled, "Navigating Chinese Indirect Taxes ," and it provides a great overview of these taxes and how they can, and almost certainly will, impact your China business. It starts out with the following general comments regarding indirect taxes in China: Indirect taxes (specifically Value Added Tax, business tax, customs duty and consumption tax) play an important role in China, accounting for almost 60% of the government’s tax revenue. Newly revised regulations are changing how indirect taxes are treated in China. But these are often the forgotten tax on business. Tax directors may overlook these costs as they are above the line and usually not directly visible within the accounts or financial statements. We are often surprised to learn that many companies have yet to grasp the significance of the indirect taxes passing through the organization. More of...
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Representative Offices In China. Things Just Got More Difficult/Expensive.
2009-08-17 17:28:00
My wildly unscientific observations tell me that about nine out of ten companies that go into China legally end up succeeding. My wildly unscientific observations also tell me that about eight out of ten companies that go into China illegally end up failing within a couple of years. Of the other two companies that went into China illegally, one usually becomes legal within a few years and ends up suceeding and the other one ends up failing a few years later. I have no idea on the accuracy of my statistics, but I truly do make an effort to keep up with every company that contacts my law firm. I do this by every six months or so sending an email asking them how things are going in China. These emails go to those companies that chose not to retain my law firm, but instead to do things illegally in China, and to those that did. No science here, but a bit more than a feeling.... I thought of all that today when I read in the highly respected Economic Observer of how China is cra...
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China's Food Chain. Nobody Trusts Nobody.
2009-08-17 11:18:00
The Eileen Eats blog did an excellent, though very disquieting, post on the state of Chinese food. The post is entitled, "Food Safety– Can’t let your guard down," and it has the following money quote: Hung Huang, chief executive of the China Interactive Media Group in China, said recently in an article in the New York Times that China as a nation of food lovers is going on a diet. “Not because we don’t love to eat anymore,” she said, “but because we just don’t know what is safe to eat.” CLB's own Steve Dickinson wrote a Wall Street Journal column earlier this year, entitled, "Food Fumble," discussing how China's new food safety laws will do little to solve China's food safety problems. What will work? When will it work? What do you think?
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A Western Woman In China....Sex, Sex, Sex????!!!!
2009-08-17 09:21:00
Not me, of course. But Gina in Shanghai, who on her blog, Gina in Shanghai, has written a very thought provoking piece, entitled, "Peter Hessler and laowai nuzi," on how Western women are viewed in China (h/t China Beat). To grossly summarize, Chinese view Western women to be like the women in "Sex in the City." Western women are envied for their independence and strength, but looked askance at for being "a bit too morally degenerate." Gina very nicely explains her frustration with these stereotyped views in a post that is well worth a read. Just added the Sex, Sex, Sex part both to draw in more readers (trust me, putting sex in a post works for this EVERY time), but also because I just came across a very interesting, and related, post on China Geeks, "Li Yinhe: Criticizing the Sex Double Standard." The post translates a Li Yinhe post on THE double standard in China when it comes to sex: "the more sexual a man is, the better; the less sexual a woman is, the better." The post c...
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An "American" Law School In China. Explanations Sought.
2009-08-16 18:34:00
My tiny firm must receive at least ten resumes every day. About a third of these come from students who, even in the best of of times, would likely never be hired as a law firm associate. Go ahead and get mad at me if you want, but those who are in the bottom half of the class from fourth tier ranked or unaccredited law schools are just not going to get hired by a law firm without exceptional circumstances. The United States is producing way more lawyers than jobs. I do not have the numbers on this, but I KNOW this to be true. Just ask Loyola 2L. And yet (usually with self-generated fanfare) new law schools just keep on coming. Why? I could talk about college presidents wanting to extend their fiefdom (and that would be true), but what it really comes down to is that law schools tend to be very profitable. I thought of all this today when I read an excellent article on the USC US-China Institute's website, entitled, "China Legal." The article is on Peking University's new...
More About: Law School , School , American

Got A China Criminal Matter. I'll Get Barack....
2009-08-15 01:11:00
One of the interesting things about the exposure that comes from this blog is that my firm gets contacted by all sorts of people with China law problems. This is mostly good because it can lead to real work. This is also good because even when it does not lead to real work, it provides great blog fodder. Like today. A while ago (I am going to be really vague on everything here for obvious reasons) I got an email from someone whose relative had been arrested in China on a criminal law violation. The email went something (again, I am changing things to hide any potential identifier, but the gist is there) like this: A family member was doing business with China as a middle man. He was getting his goods from all over Europe and the United States and then selling them in China. They turned out to be fakes. Without knowing this, he went to China on other business and some of the businesses that got the fakes from him had him arrested. There is no way to reach the people that sold...
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China Retail As Piracy Prevention.
2009-08-14 18:11:00
One of the things I love about being a lawyer is what I learn from clients. I recently started working with a company that makes a high end consumer good. In the US, this company sells its products to high end retail outlets, including department stores. It has no retail outlets. This company has been doing more and more of its manufacturing in China and, like so many, it has recently decided the time has come for it to sell its product line in China as well. They have told me that "in order to maintain exclusivity and to prevent piracy," it will be setting up retail stores in China and selling its product only from those stores. That way it will be obvious both to them and to consumers that any of its product that is not in these stores is not the real deal. Now I am sure this is nothing new to many of you (so go ahead and call me out if you wish), but this is actually the first time I have heard of a company going into China retail to protect product integrity. What do...
More About: Piracy , Retail , Prevention

Cross Cultural Dating -- China Style.
2009-08-14 04:51:00
I normally hate this sort of thing, but "Steve" over at Fool's Mountain does such a great job with it, I cannot resist posting on it. The post is entitled, "Cross Cultural Dating ," but I think it goes way beyond that and that is my point. The post does a great job explaining the need to be sensitive to other cultures and the advice given definitely translates to the business world and even to dealing with another person within the same culture. What do you think?
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China's Migrant Workers. The Revolution Will Have To Wait.
2009-08-14 01:03:00
Robert D. O'Brien (have I linked to the right person?) over at China Beat has a great post up on the impact China's manufacturing downturn is having and will have on China's big picture. The post is entitled, "China’s Migrant Workers in the Wake of the Economic Crisis: Unemployed, Undeterred," and it basically concludes that the macro impacts on China will be micro. I tend to agree. What do you think?
More About: Revolution , Wait , The Revolution

The WTO's China Video/Media Ruling. Shedding Some Light....
2009-08-13 15:48:00
Yesterday, I wrote how it was too early to proclaim repurcussions from the WTO ruling on foreign media in China . It is still too early and I still know too little, but I have seen a few things which shed a bit of light. The first is Businesweek's Eye on Asia post on the ruling, entitled, "Hollywood's Small WTO Victory Over China," in which Bruce Eichorn questions whether the ruling is as big a deal as Hollywood is making it out to be: The top lobbyist for the major Hollywood studios is hailing yesterday’s news that the World Trade Organization has ruled in favor of the U.S. government’s complaint against China’s restrictions on foreign films. After years of getting nowhere in China, the movie industry understandably is celebrating this WTO win: Dan Glickman, chairman and CEO of the Motion Picture Association of America, called the ruling “a major victory” and said in a statement it “points a way forward that will begin to even the playing field in this important mar...
More About: Video , Media , Light , Ruling

China's Labor Laws. Find Me That Company.
2009-08-13 12:12:00
Spoke with a reporter last week regarding China 's labor laws. The conversation went sorta like this: Reporter: I want your views on how enforcement of China's labor laws is holding up despite the economic downturn. I am also wondering how representative are the stories we've all heard of one bad-egg employee winning a huge lawsuit against a foreign company that is basically in full compliance with the labor laws, with every other employee running to join in. My Response: All I can tell you is what we are seeing as one small law firm that represents exclusively foreign companies doing business in China. 1. I am definitely "feeling" a loosening of labor law enforcement by Chinese government officials and even employees. This starting happening when the economy turned and it really has not changed much despite press reports of China's economy holding up well. Having a job seems to be taking greater precedence and, with that, comes a concomitant decre...
More About: Laws , Company , Find , Labor

China Guest Blogger Sought. Must Read AND Understand WTO Rulings.
2009-08-13 07:38:00
Got an email today from a leading finance magazine asking me whether the World Trade Organization's (WTO) ruling today "against" China meant "piracy is now dead in China." I told him I would review it, figure out the answer to his question, then call him. WRONG. I read a few news articles on the ruling and they all said pretty much the same thing. They said the US won on some items and China won on others. They then proceeded to quote someone from some film organization stating this was a huge victory for US film companies and that was pretty much it. So I went to the WTO site and read the "findings and conclusions." and understood pretty much none of it. There were so many cites to various WTO provisions that I realized to understand the ruling would probably take days (I am not kidding) of review and analysis. I briefly checked out the full decision, but that is 491 pages. Hell, if I am going to read 491 pages without billing for it, I am going to read An Evil Cradling, ...
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Six More Keys To Quality Product Made In China.
2009-08-12 20:45:00
The other day, I did a post entitled, "The Six (Not Five) Keys To China Quality ." In response to that post, Rich Brubaker, over at the All Roads Lead to China blog left a long and very thoughtful comment adding six additional things that should be done to better ensure quality Chinese manufacturing. I found those six items so spot-on that I am turning them into a post to give them greater play: 1. Take the time to establish the right partners and processes. Don't come to China with a list of three suppliers found on Alibaba and don't work on a time line. Get it right from the start, and if need be, take a short term hit and continue producing in the US/ EU until the China platform is ready. Should things fail, it will cost a lot more than a few months of the existing process. Dan: This is so true. Everything in China manufacturing takes longer than you think and way longer than your Chinese manufacturer will tell you. Your manufacturer is key; choose it wisely and not und...
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Easy Jobs For Foreigners In China. Everyone I Know Begs To Differ.
2009-08-12 17:28:00
New York Times article, entitled, "American Graduates Finding Jobs in China ," makes it seem that all a young American needs to do to get a job in China is to show up. Wow! When I read that article, it did not seem to jibe with what I was seeing out there, but from my perch at a tiny law firm, I figured I just was not seeing enough. Guess my perch is not so bad after all. Danwei has a great short post on this that very concisely calls bullshit on the whole idea: Danwei received email from two old China hand journalists yesterday regarding the New York Times story linked here: Wise Hack A: Here's one of those great stories that the ever lazy hack pack recycle every so often - floods of Yanks coming to China for jobs. No evidence whatsoever for this but it gets churned out again every couple of years I note. Wise Hack B: Please please mention the NYT "no Mandarin required" article and what an absolute crock of shit it is. Thanks. Stan Abrams at China Hearsay concurs: Sorr...
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China's Rio Tinto Case. Everyone Move Along....
2009-08-12 12:12:00
Okay, so the title is a bit of an exaggeration, but I do think the Rio Tinto case is being blown out of proportion, at least somewhat. From my perspective (which is based on ZERO inside information and absolutely no idea whether anyone is guilty of anything or not), this matter has always been a lot more about what the Chinese government is trying to say to its own populace than what it is trying to say to foreigners. I was just interviewed on this case and this is essentially what I had to say: It is my understanding that China just issued its charges against the Rio Tinto employees and they have been charged with bribery and with stealing commercial secrets. The government is not bringing spying/stealing of state secrets charges. The talk of bringing state secrets charges made foreign investors very nervous because it is not clear to anybody what constitutes a state secret, especially when so many businesses are government owned. My understanding is that if there had been a ...
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Made In America. Not China.
2009-08-12 01:15:00
Fascinating collection of articles over at Forbes Magazine on America n manufacturing and how it does and should compete with China . The introduction gives a good description of the themes the articles. Made in America meant something very different 30 years ago. It will mean something very different 30 years from now. All we can do is make good guesses. The facts are that 12 million adults make something for a living in the U.S., and their output accounts for $1.6 trillion, one-fifth of world manufacturing, more than that of any other nation. Yet our unprecedented manufacturing muscle is, to many, and justifiably so, in a state of crisis. Those 12 million jobs were once 19.5 million jobs. Since its peak in 1979, factory employment has never stopped falling. The hard truth? It never will. Manufacturing is always in crisis. Productivity eliminates jobs here, in China, in Mexico and everywhere. Making goods will continue to play an important part in our economy, but it will employ ...

The Six (Not Five) Keys To China Quality
2009-08-11 12:33:00
A client sent me an article the other day to ask me if it was accurate. I replied that it was, but that it left out one important element. The article is entitled, "5 Keys to Quality when Working with Chinese Suppliers." and it sets forth the following as the five keys: 1. Detailed Documents "The number one key to quality when working with factories in China is documentation. Having bi-lingual, detailed, factory agreed upon checklists in place that document an item’s specifications and the criteria for inspecting the product before shipment, is essential to controlling product quality. One can not say for sure, but I would be willing to bet that the factories responsible for products recently recalled for lead paint did not have bi-lingual documentation on hand from their customer stating the type of paints that could and could not be used. Sure, this type of documentation takes time and hard work to create, but putting such processes in place is the first and most important ...

Forum Selection Clauses. Do NOT Try These At Home
2009-08-10 15:45:00
I just got an email from a small tech company in China asking me whether its contract should call for Chinese or Russian law. My response was pretty much that I had no idea because it would depend on what was in the contract and what was most important. There is no way to know what law someone should prefer unless you first know what really matters. In my response, I also told them that the choice of forum could be as or even more important. My tiny law firm ("boutique" when I am trying to sound highfalutin) has made well over $100,000 the last couple of years fighting over badly written forum selection clauses in international contracts. Our clients (who consulted us for the first time only after they had signed these agreements and right before they were ready to sue on them) could easily have avoided the entire expense had they only done things right with their forum selection clauses in the first place. Here are the cases: 1. One had a provision calling for arbitration...
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China Blogs: That's The way, Uh-Huh Uh-Huh, We Like It, Uh-Huh, Uh-Huh
2009-08-10 12:52:00
I often receive email complaints from bloggers whose blogs are not on our blogroll. Increasingly, they favorably compare themselves to blogs on our roll, along with sometimes veiled or not so veiled complaints about those blogs. Though China Law Blog has been in existence for more than three years, we have never really provided an explanation for our blogroll, so here goes. In this intermittent series of posts, I am going to go through our blogroll in alphabetical order and explain, five blogs at a time, why each blog has made it there. Our blogroll basically consists of those blogs we like and which we think our readers will like or should be reading. We tend to like blogs that are unique in their content, well written, or consistently helpful. If we really like a blog, it makes it on no matter what. The less we like the blog, the more we have to believe it can be helpful to our readers. If a blog has not posted for a couple of months, we start seriously consider removing ...
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China's Ten Most Beautiful Churches
2009-08-09 17:59:00
I am into architecture. I love buildings and my impression of places oftentimes stems from the buildings. If buildings can speak to a people and to a history (and I am convinced that they do), religious buildings oftentimes speak the loudest. They can tell us who was up, who was down, and when. I was delighted when a client sent me this "Top ten most beautiful churches in China " and I wanted to pass it on. I have seen only two of the churches on this list, but now that I know about the others, I am going to try to knock down a few more..... Anything missing from this list?
More About: Churches , Beautiful

Doing Business With China? Don't Look To The UCC
2009-08-09 13:38:00
United States domestic business lawyers live and breathe the Uniform Commercial Code (UCC). Let's turn to Wikipedia for an explanation of how the UCC came into being and why it is so important: The Uniform Commercial Code (UCC or the Code), first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America. This objective is deemed important because of the prevalence of commercial transactions that extend beyond one state (for example, where the goods are manufactured in state A, warehoused in state B, sold from state C and delivered in state D). The UCC deals primarily with transactions involving personal property (movable property), not real property (immovable property). The UCC is the longest and most elaborate of the uniform acts. It has been a long-term, joint project of the National Conference of Commissioner...
More About: Business , China , Doing business

Law Firms Getting Scammed And What It Has To Do With China.
2009-08-09 03:10:00
If you are a lawyer, you have probably gotten one: an email from a company (usually in China , Hong Kong or Taiwan) saying they want to retain you to help them collect on debts owed to them by American companies. WATCH OUT. It is almost certainly a scam. And it works as follows: The company retains you to collect on its debts from some company and then that company very quickly agrees to settle and to send you a check. You get the check, deposit in your trust account and then send your client's share to it and retain your contingency fee. The problem arises a few weeks later when your bank reports the check to have been a counterfeit and you are on the hook. These emails are getting sent out every day and law firms are getting snared. For more on these scams, check out asiabizblog, which has been writing on these for a while.
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Chinese Prostitutes And Government Officials, And Why You Should Listen To
2009-08-08 20:25:00
A recent survey of more than 3,000 Chinese found that less than 7.9% of them trust their government officials. The media have been reporting on how 7.9% trust prostitutes, which are more trusted than the government. As one would expect, this survey has received considerable blog play: -- Chinese Trust Prostitutes More Than Party Cadres --Chinese Trust Prostitutes More Than Government Officials --Chinese Trust Prostitutes More Than Politicians (The Huffington Post) --Chinese Trust Prostitutes Over Politicians --Prostitutes Better Than Officials In China --Chinese Trust Prostitutes more than Politicians Most of the posts focus on how this Interesting Poll">poll should come as no surprise and how the same results are likely in the United States. I agree, but this post is going to be about business, not politics. I thought of this survey today in the context of a China matter we previously handled. I am going to have to be fairly vague here to avoid revealing anything that c...
More About: Listen

When The Chinese Government Talks You Should Listen.
2009-08-08 09:31:00
One of the misconceptions foreign businesses often have about China is that their providing China with a few hundred jobs means they wield real influence. They start to believe that because some local government official has been solicitous, that they are somehow protected from all the bad things they read about that happens to other foreign companies in China. For so many reasons, this is just not true. One of those reasons is economic prosperity is not the be all end all of the Chinese government. Yes, China sees the gloriousness in being rich, but that is absolutely not the government's highest priority. Its highest priority is to stay in power and maintain the status quo. China Digital Times just translated an article quoting China's Vice Minister of Foreign Affairs, Dai Bingguo: To ensure the US-China relationship develops forward in a stable, healthy and long-term way, it is very important to mutually understand, respect and support the other side, and defend our o...
More About: Government , Listen

China's Business Laws. Ignore Them At Your Peril.
2009-08-08 08:53:00
Very interesting and very thoughtful post up over at Think China , entitled, "Are rules meant to be broken?" The theme of the post is that one needs to learn to "tiptoe through the gray areas of China law." I disagree. Think China has this to say: There are many rules and regulations in China that are ignored systematically. One of the hardest things for an outsider to master is the art of tiptoeing through the gray area. If you use the western interpretation of the law, you will find PRC laws paralyzing – if you are going to be a boyscout about it, you will not be able to get anything done. * * * * The Chinese legal system is more similar to parenting. Just because other kids have an iphone doesn’t mean you can have it too. When I said no more TV ever, I really meant no more TV until I change my mind. When I said you’re grounded for life, you can of course go to school… and after school activities, and if you behave well, I won’t say a word when y...
More About: Business , Laws

China's Mafia.... Whaddya know?
2009-08-06 20:16:00
I have often wondered about the mafia in China . I have asked lawyer friends about it and I usually get pretty much the same answer: "The Communist Party destroyed it and has continued to keep it at bay. It can have no rival. That's in Hong Kong and Macao, not here." I was always skeptical. Today, China Stakes ran a story, entitled, "China's Mafia Economy Spreads Its Wings," painting a much worse picture than what I had been told. The article focuses on Chongqing, which is "notorious" for its mafia influence. The numbers, if correct, are pretty stunning: In 2008, loan sharking in Chongqing is estimated to have totaled over 30 billion yuan, equal to 1/3 of the city's total fiscal income. The total assets of one gang reached over 3 billion yuan, a quarter of which came from loan sharking. I have to say though that none of our clients have ever told us of having mafia problems in China, though I also have never asked. So what is going on out there? How big is China's maf...

Wanna Be A China Lawyer? Creeps Need Not Apply.
2009-08-04 16:28:00
And the sign said long haired freaky people need not apply So I tucked my hair up under my hat and I went in to ask him why He said you look like a fine upstanding young man, I think you'll do So I took off my hat I said imagine that, huh, me working for you Signs, by the Five Man Electrical Band At least three times a week, I get emails from earnest young college and law students seeking advice on what they should do to become international (usually China ) lawyers. My advice is pretty simple. Study hard, get killer grades, and learn your languages, both spoken and written. I should also tell them not to be a creep, but I figure either they are or they are not. But even these things do not (especially these days) mean you will get hired and they certainly do not mean you will be effective. For that there are the intangibles. My firm recently went through a massive interview process for a legal assistant and, though this may sound weird, that process is pretty much the same...
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How To Succeed With Your China Business. Well....Sorta.
2009-08-04 08:02:00
Cn Reviews does a nice job covering an interesting discussion on doing technology business in China . Though the discussion seemed to focus on the tech industry, what was said pretty much applies to all businesses. I will note what was said (in bold) and then comment. 1. Cheap Labor is not to be found in Beijing and Shanghai. I always get irritated with statements like this, mostly because I only hear statements like this from company executives trying to convince the public that they are in China for reasons other than cheap labor. I completely buy into the idea that companies go to China for way more than cheap labor. In fact, I would estimate that well over half of the companies my firm has helped take into China in the last year had reasons for going there that had absolutely nothing to do with Cheap labor; most were going there to better sell into Asia. But, the reality is that even though labor in China is way more expensive than it was five years ago, and even though wh...
More About: Business